Moody’s Analytics Predicts Slow Growth and High Unemployment
Moody’s Analytics’ Chief Economist Mark Zandi has downgraded his predictions about economic growth in the United States. From Moody’s Analytics:
We are significantly lowering our expectations for near-term economic growth. Real GDP is now expected to expand at an annualized rate near 2% during the second half of 2011, and just over 3% next year. A month ago we projected GDP growth at 3.5% during the second half of this year and through 2012. A reduced rate of consumer spending growth accounts for most of the downward revision.
The economy needs to grow 2.5% to 3% per year to add jobs fast enough to keep the unemployment rate stable; this will not happen soon. Employers will have added about 1.25 million jobs on net between the fourth quarters of 2010 and 2011, and 2 million more by the fourth quarter of 2012. By then U.S. employment will total some 1 million less than expected in last month’s forecast. Unemployment will thus end 2012 near 8.5%, rather than falling below 8% as previously anticipated.
While I can’t speak personally to the quality of the economic analysis, if it proves correct this would be devastating news for the Obama campaign. Given how much the President’s job approval rating is depending on how people view the state of the economy, I don’t see how President Obama can win re-election with official unemployment around 8.5 percent. That would mean unemployment would be higher than when Obama took office in 2009.